Buyers still falling victim to wonky contracts

Ministry of Public Security’s Hanoi and Ho Chi Minh City investigation departments have received thousands of letters from residents accusing directors of several private real estate companies of taking advantage of investors’ good faith to appropriate their property.

Some of the directors have been arrested, however, it is difficult for residents to recover lost money.

Recently, about 80 customers of the Montana Apartment project in Tan Phu district, Ho Chi Minh City sent letters to the city’s investigation department accusing Phan Tan Phat, former director of the project’s developer Ngan Thanh Joint Stock Company, and surrounded his home demanding their money back.

Home-buying dreams are turning into nightmares for many buyers

Meanwhile, the company was condemned by the city’s construction department as it signed house purchasing contracts in the form of capital contributions even the project’s foundations had not been completed.

Before Decree 71/2010/ND-CP, come into force in August 8, 2010, developers were allowed to sign house purchasing contracts with customers only after their project’s ground clearance and foundations were completed. 

Ho Chi Minh City Construction Department planned to take back the project as it did not believe Ngan Thanh’s capacity to construct the Montana Apartment and requested the company refunded customers before July 2010.

However, no money was forthcoming.

Meanwhile, more than a hundred of buyers also sent letters to the department accusing Nguyen Xuan Huong, southern director of Tranco Company of selling land plots in Phuoc Kien residential area project, Ho Chi Minh City’s Nha Be district via capital contribution contracts. However, the project was not constructed as agreements in the contracts, which were signed eight years ago.

Until now, buyers still did not received the land plots in Phuoc Kien residential project.

In Hanoi, two instigators of pre-selling residential project fraud were arrested. However, they have not appeared before a court.

Recently, May 1 Construction and Service Joint Stock Company (May 1 Company) chairman Le Hoa Binh and chief account Nguyen Thi Kim Thoa were arrested by Hanoi investigation department for raising nearly $22.6 million from 575 people for the Thanh Ha Cienco 5 new urban area project in Ha Dong district via capital contribution contracts.

However, the project’s developer Cienco 5 Land confirmed that they had not sold the project to May 1 Company and the latter had no rights to execute the project.

When the fraud was discovered, May 1 Company leaders promised to refund their victims by selling off another property project, Nam Dan Plaza next to Keangnam Hanoi Landmark, located at Tu Liem district’s Pham Hung road.

However, the company has only returned 65 per cent of the money as it has not been able to sell its stake at Nam Dan Palza.

A year ago, Le Hong Bang, director of Vietnam Real Estate Trading Floor Joint Stock Company was arrested for raising about $16 million from 400 customers with capital contribution contracts to buy residential units in Phuong Dong apartment project in Tu Liem district’s Minh Khai ward and seven others false residential projects whilst he had no official investment certificates for eight of above projects. Bang has still not been punished as Hanoi investigation department is waiting for the report of financial losses from the rest of 120 of his victims.